UK Tax Authority Confiscates 3 NFTs Involved in $1.8M Fraud

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According to the BBC, the UK’s tax department, Her Majesty’s Revenue and Customs (HMRC) have confiscated three NFTs as part of a larger investigation into VAT (value-added tax) fraud.

HMRC has seized an NFT for the first time.
This example “serves as a caution to anyone who believes they can use crypto assets to hide money from HMRC,” said Nick Sharp, the deputy director of economic crime.
“We continually adapt to new technology to guarantee we stay on top of how criminals and tax evaders try to hide their assets,” the deputy director continued.
According to the BBC, HMRC said it secured a court order to detain the NFTs, seized alongside approximately $6,700 worth of crypto assets.
The suspects involved also reportedly used “sophisticated methods” to conceal their identities. These involved false addresses, prepaid burner phones, the use of VPNs, and falsified invoices.

Crypto, NFTs, and crime

HMRC’s seizure of three NFTs comes amid a string of similar stories indicating how NFTs can be used to facilitate illicit activity.
Earlier this month, blockchain analytics firm Chainalysis released a report that detected significant wash trading and money laundering evidence throughout the NFT industry.
“As is the case with any new technology, NFTs offer the potential for abuse. So it’s important that as our industry considers all the ways this new asset class can change how we link the blockchain to the physical world, we also build products that make the NFT investment as safe and secure as possible,” Chainalysis said at the time.
Of course, HMRC isn’t the only one concerned about digital collectables and illegal activities. The Art and Antiques Unit of the London Metropolitan Police said last year that it was “very much aware” of the risks posed by NFTs.
According to a representative for the unit, the relative anonymity of blockchains allows people to hide their identities.

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Shambhavi Soni